appraisal of car via kelly, edmunds, and nada

Hi all, I appraised my car at all three sites via trade-in value. Kelly and Edmunds came very close to each other while Nada was a thousand dollars higher. The dealers are offering me $2k less than kelly and edmunds (or $3k less than Nada).

Are the sites that far off? What's everybody experience/opinion with the appraisal info from these sites?

Thanks!

Based on my past experience $2k under KBB is actually a pretty good deal.

The bluebooks are essentially worthless IMHO.

Originally Posted by AMP

The bluebooks are essentially worthless IMHO.

Yup. I agree.
When I was selling cars, and people used to waive Kelly bluebook" in front of me trying to get retail for a trade in, I would remind them that Mr. Kelly is in the business of selling books, while we were in the business of selling cars.

It's still kinda true. The car is worth what someone is willing to pay for it - not what it says in a book.

.

I believe the Galves book is the one dealers in the Northeast use (at least in NY/Long Island). They don't give away their service, but you can purchase pricing reports. Prices from Galves usually are lower than EdmundsKelleyNADA.

End $.02.

Originally Posted by Frank Rizzo

It's still kinda true. The car is worth what someone is willing to pay for it - not what it says in a book.

.

What do they tell you about free advice? It's worth what you paid for it. Any "car appraisal" that you receive from one of the online sites is essentially worthless. These companies in many cases do not monitor real transactions (auctions, etc.) to see what these cars are going for. Also, of the ones that do actually do this, many do it irregularly. The dealers that actually use KBB to obtain values know how to "adjust" the values for time (i.e. by the time they get their copy of the book, it is already outdated, and they know how to make the accurate adjustments to the values).

Dealers are willing to buy cars, while I know of none of the online sites that give you the option of selling your car to them at their "appraisal value". The car is only worth what someone will pay for it.

If you want to get a value for your car, you might want to try using a service like Galves (www.galves.com) which we use at our store, or by trying out some stores like Carmax, etc. that buy cars regularly and see what they tell you it is worth.

I recently sold my 330Ci to a private buyer. Prior to that I entertained offers from 2 BMW dlrs (~23k 12/26 & 24.5k 12/1) and Carmax 25.5k on 12/1. I sold it for 28.5 on 1/20 which was fair but not top dollar for it's mint condition. That's right around ave private sale on KBB or Edmunds as I recall.

Originally Posted by SARAFIL

What do they tell you about free advice? It's worth what you paid for it. Any "car appraisal" that you receive from one of the online sites is essentially worthless. These companies in many cases do not monitor real transactions (auctions, etc.) to see what these cars are going for. Also, of the ones that do actually do this, many do it irregularly. The dealers that actually use KBB to obtain values know how to "adjust" the values for time (i.e. by the time they get their copy of the book, it is already outdated, and they know how to make the accurate adjustments to the values).

Dealers are willing to buy cars, while I know of none of the online sites that give you the option of selling your car to them at their "appraisal value". The car is only worth what someone will pay for it.

This needs to be on a sign at my desk. Very well put.

Originally Posted by SARAFIL

What do they tell you about free advice? It's worth what you paid for it. Any "car appraisal" that you receive from one of the online sites is essentially worthless.......

Dealers are willing to buy cars, while I know of none of the online sites that give you the option of selling your car to them at their "appraisal value". The car is only worth what someone will pay for it.

If you want to get a value for your car, ...............by trying out some stores like Carmax, etc. that buy cars regularly and see what they tell you it is worth.

CarMax's website actually has a link to Kelley Blue Book. They tell you that the trade in value given there is a good estimate of what CarMax will pay you.

I got offers and sold my 318ti for over and above what KBB estimated the sell price would be to a private party.

Originally Posted by Chris330Ci

This needs to be on a sign at my desk. Very well put.

Disclaimer: This post contains general messages addressed to fake individuals. Comments made about consumers are addressed at the "general consumer", and are not to be interpreted as attacks or mockery of any specific person (or anyone on this board).

I think this misunderstanding of used-car trade in value contributes a great deal to the general distrust of car dealers. I'm fortunate enough to have entered the business at a young age (16), before I had come up with any negative images about car dealers. Never having held that view myself, and being on the inside for several years, I find the entire concept to be quite ammusing.

When an investor prepares to make a decision on potential investment opportunities, the first thing he should consider is each of the possible outcomes, the financial result of each outcome, and likelyhood of each one occuring. In the used car market, there are a number of potential outcomes. The dealer could do several things with the car-- sell it as a retail unit, sell it to an employee, sell it to a wholesaler, or sell it at auction, being the most common. Each outcome has a value associated with it. At retail, your car will fetch $xxx. A local wholesaler will pay $xxx, and at auction, it will get $xxx. Usually speaking, the auction fetches the least, because the buyer has to consider auction fees and transportation of the car into their final cost, which reduces how much they'll pay for the car itself.

"So, what does this all have to do with me," you ask? "My car is very nice.... they're definately not going to wholesale it!" Hmmm.... I wouldn't be so sure, buddy. In one case, said dealer could already be overflowing with 330i sedans up to his eyeballs, and the mere though of another one, regardless of how nice it might be, makes him sick. He is definately going to get rid of your car, so it isn't worth over wholesale.

A more likely scenario concerns a dealer's turn period. Vehicle inventory is financed, and combined with the fact that cars depreciate and tend to require maintenance if the sit on a lot for a while, your dealer likely has determined a length of time that they will keep a car in inventory for. It gets costly to finance these cars, as well as maintaining them, and considering that the car will loose value each month, the dealer will find it in their best interest to just wholesale the car after that time is reached than to sit on it any longer. So, despite how cherry your car is, if it reaches its time, it is gone. No ifs, ands, or buts about it. Most of the publicly traded stores use a 60 day turn, and some other stores go as high as 90 or 120 days. We have to ensure that the car is priced in a manner that we will not face significant losses should the car have to be wholesaled. And once again, your car is not immune from this fate. We lose alot of very nice cars each month this way, some of each type-- 3s, 5s, 7s, X5s, Zs.

Finally, a dealer has to allow for the expense of reconditioning a car for sale. Let me shares some numbers with you: $1900. $900. $350. What are these numbers? The first is the repair order from a recent off-lease 325i that we purchased with 41,000 miles to bring it up to CPO specs (and nothing major, I should tell you. Brakes, oil service, some filters, a few tires) The second is the approximate cost of certification on that particular 3 series. The third is a very understated estimate of what it costs to make the car "front line ready" (reconditioning, ding removal, chip repairs, etc.) Add all these costs up, and you'll see that to sell a CPO car, a dealer is not fortunate enough to slap an inspection sticker on the car and take it through the local quickie-lube like the corner used car lot can. Our cars are more expensive to buy, but they are fully serviced, fully reconditioned, and essentially in like new condition. We can not give you private party value for the car, spend $3,000+ to bring it up to spec, and then sell it and still make a profit.

I really wish alot of people that label the car industry as a bunch of cheating, slimey liars could spend a week in a dealership, see the expenses that are indured to bring a car up to saleable specs, the expenses (losses) associated with wholesaling cars, the relatively low gross earned on many car deals (ironically, the same ones that some people think the dealer is making a killing on). Some of you probably think I'm a quack by now, but I really encourage any of you that have the opportunity to see how a dealer really works to take that opportunity. You'd be surprised...

Sarafil,

Thank you for the very insightful, detailed overview of "pre - owned" vehicle pricing. From your description, the BMW Center where you work maintains very high ethical standards. I can assure you that there are many unscrupulous client advisors who will maximize their profit at an uniformed buyer's expense. Although the adage states "buyer beware," many people are uninformed about assessing a "reasonable" price and do not have sufficient time to research the market. This is particularly true with pre owned vehicles.

The primary thread topic is fair car value appraisal. In my experience selling used cars (my own personal vehicles), the best strategy is to analyze the marketplace for the geographic area by canvassing newspaper ads, used car lots, and auction prices, if available. My own experiences have been quite favorable. I was able to sell these cars relatively easily with a minimal amount of trouble. I priced the vehicles using KBB "retail" with the assumption that this price was for a car that was essentially in superb condition (minimal signs of wear) - no mechanical problems or interior flaws. I then deducted the cost of the repairs needed to restore the car to the KBB retail condition. In these cases, the buyers agreed to the asking price after I had explained my justification for determining the value of the car. I am certain I did not obtain "top dollar" for these cars, but for a slight reduction in the asking price, I was able to locate potential, serious buyers and complete the sale very quickly. I was able to sell these cars at a much higher price than I would have received during a "trade in" for the reasons you have presented.

Tragically, I know many women who have been "preyed upon" by car sales people. A close, friend who is an elderly woman was sold a "pre - owned" vehicle for which the sales person agreed to offer a relatively high value for a "trade in" and lower the asking price of the car and then proceeded to finance the purchase at astronomically high rates with added fees. Yes, buyer beware but "fleecing" an elderly woman with minimal financial resources is shameful. Had I known about her decision to purchase the car, I would have been happy to assist her.

I often refer potential car buyers to client advisors. But, I explain to them the reasons for the referral to a particular advisor. For example, there is a client advisor who offers a minimal discount for the European Delivery Program. Yet, she is exceptional in service and maintains excellent communication, coordination, and finalization of the process throughout the entire sale. Post sale, she maintains contact to ensure customer satisfaction. Her service is exemplary and the lack of a large discount is well worth the added cost of her services, in my opinion. Furthermore, a good, respected client advisor can provide superb support, particularly with influencing some of the decisions of the service department.

Finally, I had hoped to purchase our next car through Jon Shafer and Cutter. He epitomized all of the best qualities in sales managers, and I would have liked the opportunity to express my gratitude through a purchase for his support of this board.

Originally Posted by SARAFIL

Disclaimer: This post contains general messages addressed to fake individuals. Comments made about consumers are addressed at the "general consumer", and are not to be interpreted as attacks or mockery of any specific person (or anyone on this board).

I think this misunderstanding of used-car trade in value contributes a great deal to the general distrust of car dealers. I'm fortunate enough to have entered the business at a young age (16), before I had come up with any negative images about car dealers. Never having held that view myself, and being on the inside for several years, I find the entire concept to be quite ammusing.

When an investor prepares to make a decision on potential investment opportunities, the first thing he should consider is each of the possible outcomes, the financial result of each outcome, and likelyhood of each one occuring. In the used car market, there are a number of potential outcomes. The dealer could do several things with the car-- sell it as a retail unit, sell it to an employee, sell it to a wholesaler, or sell it at auction, being the most common. Each outcome has a value associated with it. At retail, your car will fetch $xxx. A local wholesaler will pay $xxx, and at auction, it will get $xxx. Usually speaking, the auction fetches the least, because the buyer has to consider auction fees and transportation of the car into their final cost, which reduces how much they'll pay for the car itself.

"So, what does this all have to do with me," you ask? "My car is very nice.... they're definately not going to wholesale it!" Hmmm.... I wouldn't be so sure, buddy. In one case, said dealer could already be overflowing with 330i sedans up to his eyeballs, and the mere though of another one, regardless of how nice it might be, makes him sick. He is definately going to get rid of your car, so it isn't worth over wholesale.

A more likely scenario concerns a dealer's turn period. Vehicle inventory is financed, and combined with the fact that cars depreciate and tend to require maintenance if the sit on a lot for a while, your dealer likely has determined a length of time that they will keep a car in inventory for. It gets costly to finance these cars, as well as maintaining them, and considering that the car will loose value each month, the dealer will find it in their best interest to just wholesale the car after that time is reached than to sit on it any longer. So, despite how cherry your car is, if it reaches its time, it is gone. No ifs, ands, or buts about it. Most of the publicly traded stores use a 60 day turn, and some other stores go as high as 90 or 120 days. We have to ensure that the car is priced in a manner that we will not face significant losses should the car have to be wholesaled. And once again, your car is not immune from this fate. We lose alot of very nice cars each month this way, some of each type-- 3s, 5s, 7s, X5s, Zs.

Finally, a dealer has to allow for the expense of reconditioning a car for sale. Let me shares some numbers with you: $1900. $900. $350. What are these numbers? The first is the repair order from a recent off-lease 325i that we purchased with 41,000 miles to bring it up to CPO specs (and nothing major, I should tell you. Brakes, oil service, some filters, a few tires) The second is the approximate cost of certification on that particular 3 series. The third is a very understated estimate of what it costs to make the car "front line ready" (reconditioning, ding removal, chip repairs, etc.) Add all these costs up, and you'll see that to sell a CPO car, a dealer is not fortunate enough to slap an inspection sticker on the car and take it through the local quickie-lube like the corner used car lot can. Our cars are more expensive to buy, but they are fully serviced, fully reconditioned, and essentially in like new condition. We can not give you private party value for the car, spend $3,000+ to bring it up to spec, and then sell it and still make a profit.

I really wish alot of people that label the car industry as a bunch of cheating, slimey liars could spend a week in a dealership, see the expenses that are indured to bring a car up to saleable specs, the expenses (losses) associated with wholesaling cars, the relatively low gross earned on many car deals (ironically, the same ones that some people think the dealer is making a killing on). Some of you probably think I'm a quack by now, but I really encourage any of you that have the opportunity to see how a dealer really works to take that opportunity. You'd be surprised...

The bottom line is the dealer is in business to make money. And a trade in is a chance to make money, by selling it. So they will always give yo less than they expect to get for the car in whatever market they sell it.

So your best return is to sell the car to a rpivate individual yourself. That way you make the profit o the sale, not the dealer.

Also if you trade, you are opening yourself up to other shady practice (but common) is jacking the price of the new vehicle (not not giving the maximum discount) to cover what the customer BELIEVIES their car is worth, and won't take a penny less. Again, the dealer is trying to make money on both ends of the deal. Same for those $100 trade in for ANY car you bring in. Trust me, they are not actually GIVING you a $1K for that piece of junk.

Interesting. When I traded in my wife's Altima on the RX8, the dealer offered me more than KBB's trade in value on an "Excellent" condition car...and my wife's Altima wasn't in "Excellent" condition. It was only because their offer was so close to what I expected to be able to get privately that it was worth it to me not to have the hassle that I continued to work on a price for the RX8. I fully expected to leave there in the Altima because I figured that they would try to stick me on the price of the RX8. But the price we wound up with was below what I considered a fair price (based on what I had read that other people were paying at the time) and was as good as anyone else had reported by then. A few weeks later, I saw the Altima advertised for not much more than they gave me for it.

It just seemed unusual from start to finish.

Originally Posted by SARAFIL

Disclaimer: This post contains general messages addressed to fake individuals. Comments made about consumers are addressed at the "general consumer", and are not to be interpreted as attacks or mockery of any specific person (or anyone on this board).
I really wish alot of people that label the car industry as a bunch of cheating, slimey liars could spend a week in a dealership, see the expenses that are indured to bring a car up to saleable specs, the expenses (losses) associated with wholesaling cars, the relatively low gross earned on many car deals (ironically, the same ones that some people think the dealer is making a killing on). Some of you probably think I'm a quack by now, but I really encourage any of you that have the opportunity to see how a dealer really works to take that opportunity. You'd be surprised...

I'll take a swing . . . since I've been on both sides.

If you friendly car sales people are so ethical, why are there more laws enacted to protect the consumer when purchasing an automobile, that for any other transaction? Car dealers lobbied for tougher legislation and all sorts of disclosures on advertising.....because it makes them feel good, huh? Maybe Mr. Maroney was a car salesman just trying to help the consumer?

In Los Angeles, (Cutter not withstanding) the car lots are ruled by the "ass-for-every-seat, A.B.C., they wouldnt, be on the lot if they didn't want to buy" Sales Manager - - -who will gladly can your arse when you don't roll enough units that month. Given an opportunity - most dealers will go for the high gross on one sale, rather than earning repeat and referral business. My heart bleeds for the poor dealer .... seeing how they just buried the non-english speaking geltleman in the 72 month lease on a base Sentra 5-speed...(I think that if dealers were really interested in giving good deals, they would drop the $800-each-parabolic-light-fixtures and marble showroom floors build the building like a Costco).

The dealer makes money on the trade, makes money on the sale, makes money off the paper, and makes money off the service and accessories. Boo-hoo-hoo if you get taken occasional by someone on a trade in. Chances are they (as probably everyone else has) got skrewed by a dealer at one time or antoher - and were just giving it back. Life has a funny way of doing that. Before you complain about the car dealer's malfesant reputation(s), think about how it was earned over time (everyone has a "car dealer" story), and how hard it is going to be to put that genie back in the bottle. Maybe not you - but your predecessors are to blame.

Don't get me wrong...I LIKE the current system of purchasing an automobile. I enjoy buying cars and willingly go with friends/family when they buy a car. They way it is now, I am one of the approximate .05% of the U.S. population that did REALLY get a good deal....but I'm sure the dealer makes it up on the next sale.

Confessions of a car salesman: http://netscape.edmunds.com/advice/b...2/page001.html
He's they guy you should feel sorry for...not the dealer.

Originally Posted by Magna

The dealers are offering me $2k less than kelly and edmunds (or $3k less than Nada).

That sounds about right. $2000 under trade-in is "wholesale price", and is usually what dealers are willing to offer on trade.

Originally Posted by Frank Rizzo

I'll take a swing . . . since I've been on both sides.

Q: Why do car dealers lie so much?

A: They have no choice, because they have to deal with customers that come in saying they have the title to their trade, their credit is perfect, and they're ready to buy immediately. Only after hours of back-and-forth negociation does the dealer realize the customer is $10,000 upside down in his old hunk, has a credit history with every possible flaw on it (some at least twice), and is just looking at the car he plans to buy in two years.

It's a tought industry, that's for sure. However, in many cases, customers have put up defense mechanisms that make the entire process worse than you ever thought possible. In some cases, the dealer has to act a bit sneaky, but only to end up on a level playing field with the customers.

Who ever would have thought that customers lie?

When you trade in a car you are only paying tax on the difference between the trade in price and the new car price.At times it could work to your advantage.
Good luck
vern

In my experience, transparent negotiations work best. I understand Sarafil's point of view that potential buyers with unrealistic expectations tempt sales people to "play" the game of profit maximization. However, this is precisely the reason why some of us were willing to travel hundreds of miles to purchase a car from Jon Shafer - completely transparent negotiations and good faith sales. In my opinion, ethical sales people provide a written worksheet with a final price and an offer to beat any competitive, completed worksheet. This seems to be a fair process.

Originally Posted by rumratt

Boooooo. Don't blame it all on the customer. You're pulling a "he did it first" argument. The disrespect between a car seller and the car buyer goes both ways for legitimate reasons.

I should have made it clearer that that is not necessarily my view. That's an old joke that I found somewhere (I can't remember where...)

Originally Posted by rumratt

The truth is that the salesman lies because he wants to make more money, and the buyer lies because he wants to pay less. As long as a system exists that allows this strategy to be effective, they're both going to lie.

I don't think car salesmen are any different than the rest of the people in the world. It's just that they are in a situation where there are more opportunities to make an extra buck by telling a small fiib here an there.

I'll be quite honest when I say that it is alot of the regulation that Frank Rizzo mentioned above that really hurts the consumer in the end of the day. How many other industries have so much information about the product, the costs of the product, the profit structure of the retailer, etc. made available to the general public? I think that there is too much info readily available, and alot of dealers feel that they have to find some way to get a bit more profit.

I didn't mean to blame the consumers, because for the most part, they are the victims of the structure of the industry. However, I do need to emphasize that alot of clients do make the dealers work very hard for their money, and I see no problem with a dealer making a bit more money on these deals.

I also think the dealers take too much blame. I don't entirely agree with what Frank Rizzo suggested above that the dealers are the only ones responsible for the problems of the industry. There are ALOT of dealers that are shady, I will definately agree. However, as I hope you've noticed here, there are alot of dealers that are fair, equitable, and honest. To make a blanket statement that all dealers screw all customers is far reaching, and there is not enough evidence to back it up.

I still think that all the regulation in the industry is too extensive, and while having good intentions, has forced dealers to try and find secret ways to pack their deals with more profit. I'm sure you all agree that there is nothing wrong with a dealer as a business making a profit. What you do agree with (and what I agree with) is that the dealer in some cases has to resort to secretive means to make more profit. If things were a bit different, and didn't seem to require dealers to get profit from hidden aspects of the deal, maybe a more competitive, dealer-friendly and definately customer-friendly industry structure could arise.

It's funny that this topic came up when it did. I can't/won't go in to more detail at this time, but I have a prediction that in a few weeks time, we'll all be discussing the topic of dealership operations and just how they make their money. I assure you this topic will be revisited at that time.

Originally Posted by vern

When you trade in a car you are only paying tax on the difference between the trade in price and the new car price.

This is true in only some states.

Sorry about the sweeping generalizations......there is also an abundant amount of "credit mooches" that hover in and out of the car industry - those people who "use bankruptcy as a financial planning tool".....

.....but I still think the industry did it to themselves.

Originally Posted by SARAFIL

I'll be quite honest when I say that it is alot of the regulation that Frank Rizzo mentioned above that really hurts the consumer in the end of the day. How many other industries have so much information about the product, the costs of the product, the profit structure of the retailer, etc. made available to the general public? I think that there is too much info readily available, and alot of dealers feel that they have to find some way to get a bit more profit.

Would this whole issue of mutual distrust not go away if cars were sold for a fixed price like the majority of things in this country as opposed to a commodity where the price varies due to buyer/sellers agressiveness, mood, time of day, time of the month, etc.? Saturn uses this process (fixed price) so why has everybody else not followed suit, including GM. You could always have offers or discounts. Imagine going to Home Depot and spending a couple of hours negotiating the price of the tractor mower you want to buy.

Playing these games is not requirement for purchasing a car. My 318ti purchase was the most pleasant experience I ever had. I was offered a discounted price, mentioned that their competitor had offered me a Techno Violet 318ti (not my color) at a greater discount. Checked with the GSM and agreed that they could give me an equal discount. Brought up the subject of trade, I was offered wholesale. I knew that with a 104,000 mile car that was what I was going to get. The wholesale price matched the auction prices I had researched. I told them I had arranged for Internet financing, they checked and came back with a better rate. They did not try to sell me extended warranties, window etching, paint protection, interior protection, etc. During the whole process I was treated with respect and spoken to cordially. I was never screamed at (it has happened) or spoken to in a condescending way. I was happy with my purchase and they were happy to sell a car that had been on the lot for 3 months.

Originally Posted by LDV330i

............ Saturn uses this process (fixed price) so why has everybody else not followed suit, including GM.......

FYI: The "saturn" system of sales is kinda a joke.
Sure the price of the car is fixed, but you still need to negotiate the trade-in value and the financing....

GM did try it for a while on certain autos in the line - they called it "GM Value Pricing". My buddy was selling GM at the time and had to move to another dealer in order to makea living. Accoring to him (at the time) every "value price" car was a "skinny" that he only got a $50 or $100 comission on.

Originally Posted by Frank Rizzo

FYI: The "saturn" system of sales is kinda a joke.
Sure the price of the car is fixed, but you still need to negotiate the trade-in value and the financing....

GM did try it for a while on certain autos in the line - they called it "GM Value Pricing". My buddy was selling GM at the time and had to move to another dealer in order to makea living. Accoring to him (at the time) every "value price" car was a "skinny" that he only got a $50 or $100 comission on.

It would take alot of work and some creative ideas to "fix" the problems with today's auto industry. I don't think the Saturn system comes close. You got it right on-- all it does is open the door to low-ball trade in values, high rate mark-ups, and excessive pressure in F&I to sell maintenance plans, extended warranties, etch, paint applications, etc.

I'll be quite honest in that I don't know for sure what it'll take. However, the industry needs more freedom to be creative, giving the good dealers an incentive to come up with a way of making their process easier and more customer-friendly. A Saturn-like pricing strategy will only piss off the dealers and there will still be customers that think they can "do better". Alot of changes can be made within the existing framework in the mean time, though.